Although bankruptcy filing rates are down, the primary cause for most bankruptcies at my office is underwater home mortgages and the inability to pay those mortgages.
When someone applies for a mortgage, the bank (or mortgage broker) uses a variety of tools to determine the amount of money the applicant can borrow -and for how long. Of course, one of the factors that weighs heaviest is the borrower’s ability to repay the loan. Although interest rates have varied greatly over the years, the term length of mortgages has generally increased. For instance, mortgages are usually thought to last thirty years, but now I have seen forty year mortgages and have even heard of fifty year mortgages.
Since the average age of a first-time homeowner is 34, a forty year mortgage would leave the buyer at 74 by the time they paid off their house. According to the CIA, the average American lives to be a little more than 78 years. This means that people (often couples) work almost their entire lives to pay off their homes.
Combine these grim facts with the idea that their home is now worth far less than they owe and that they have a decreased income and you have a person who is in dire need of bankruptcy if they are ever going to own a home at all.
If your home is underwater and you are unable to continue your payments, contact a Jacksonville Bankruptcy Attorney or call us at (904) 685-1200 for a free consultation.